DragonWave : Reports Third Quarter Fiscal Year 2016 Results

OTTAWA, CANADA--(Marketwired - Jan 13, 2016) - DragonWave Inc. (TSX:DWI)(NASDAQ:DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for the third quarter of fiscal year 2016. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles ("GAAP").

Revenue for the third quarter of fiscal year 2016 was $21.0 million, compared with $26.9 million in the second quarter of fiscal year 2016 and $47.3 million in the third quarter of the fiscal year 2015. Revenue from the Nokia channel represented 40% of revenue in the third quarter of this fiscal year, versus 50% in third quarter of fiscal year 2015.

Gross profit in the third quarter of fiscal year 2016 was 23.5%, compared with 14.8% in the second quarter of fiscal year 2016 and 16.3% in the third quarter of fiscal year 2015.

Operating expenses excluding restructuring charges were reduced from $10.5M in the previous quarter to $8.7M in the third quarter.

Net loss attributable to shareholders in the third quarter of fiscal year 2016 was ($6.2) million or ($0.08) per basic and diluted share, which included restructuring charges of $1.4M. This compares to a net loss attributable to shareholders of ($21.0) million or ($0.28) per basic and diluted share in the second quarter of fiscal year 2016 and ($3.8) million or ($0.05) per basic and diluted share in the third quarter of fiscal year 2015.

"We made important improvements this quarter by increasing our gross margins and reducing operating expenses. We have begun to realign the organization to address customer opportunities on a direct basis in light of the changes in our Nokia channel." said DragonWave President and CEO, Peter Allen.

Cash and cash equivalents totaled $7.8 million at the end of the third quarter of fiscal year 2016, compared to $13.1 million at the end of the second quarter of fiscal year 2016.

Webcast and Conference Call Details:

The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time on January 14, 2016.

The live webcast and presentation slides will be available at the Investor Relations section of the DragonWave website at: http://investor.dragonwaveinc.com/events.cfm

An archive of the webcast will be available at the same link.

Conference call dial-in numbers:

Toll-free North America Dial-in: [phone]

International Dial-in: [phone]

About DragonWave

DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is wireless network backhaul, including a range of products ideally suited to support the emergence of underlying small cell networks. Additional solutions include leased line replacement, last mile fiber extension and enterprise networks. DragonWave's corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America. For more information, visit http://www.dragonwaveinc.com.

DragonWave®, Horizon® and Avenue® are registered trademarks of DragonWave Inc.

Forward-Looking Statements

Certain statements in this release constitute forward-looking statements or forward-looking information as defined by applicable securities laws. Forward-looking statements include statements as to DragonWave's forward opportunities and the potential benefits of, and demand for, DragonWave's products. These statements are subject to certain assumptions, risks and uncertainties, including our view of the relative position of DragonWave's products compared to competitive offerings in the industry.

Forward-looking statements are provided to help external stakeholders understand DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on such statements. DragonWave's actual results, performance, achievements and developments may differ materially from the results, performance, achievements or developments expressed or implied by such statements, as a result of the risks identified above as well as other risks identified in our publicly filed documents. Material risks and uncertainties relating to our business are described under the heading "Risks and Uncertainties" in the MD&A dated January 13, 2016 and in the Company's Annual Information Form and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively. DragonWave assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.

CONSOLIDATED BALANCE SHEETS
Expressed in US $000's except share amounts
(Unaudited)
		As at		As at
		November 30,		February 28,
		2015		2015
Assets
Current Assets
	Cash and cash equivalents	7,784		23,692
	Trade receivables	27,566		48,626
	Inventory	25,403		24,294
	Other current assets	3,611		5,834
	Deferred tax asset	25		61
		64,389		102,507
Long Term Assets
	Property and equipment	4,148		4,322
	Deferred tax asset	-		1,485
	Deferred financing cost	-		18
	Intangible assets	704		794
	Goodwill	-		11,927
		4,852		18,546
Total Assets		69,241		121,053
Liabilities
Current Liabilities
	Debt facility	26,652		-
	Accounts payable and accrued liabilities	26,118		40,163
	Deferred revenue	2,024		830
	Capital lease obligation	211		514
	Warrant liability	47		-
		55,052		41,507
Long Term Liabilities
	Debt facility	-		32,400
	Other long term liabilities	888		1,139
	Warrant liability	4		1,239
		892		34,778
Shareholders' equity
	Capital stock	221,126		220,952
	Contributed surplus	9,024		8,388
	Deficit	(209,094	)	(175,921	)
	Accumulated other comprehensive loss	(9,618	)	(9,618	)
Total Shareholders' equity		11,438		43,801
	Non-controlling interests	1,859		967
Total Equity		13,297		44,768
Total Liabilities and Equity		69,241		121,053
Shares issued & outstanding		75,487,649		75,290,818

CONSOLIDATED STATEMENTS OF OPERATIONS
Expressed in US $000's except share and per share amounts
(Unaudited)
		Three months ended				Nine months ended
		November 30,		November 30,		November 30,		November 30,
		2015		2014		2015		2014
REVENUE		20,997		47,320		74,254		114,024
Cost of sales		16,063		39,602		59,786		94,527
Gross profit		4,934		7,718		14,468		19,497
EXPENSES
	Research and development	2,873		4,827		10,981		14,386
	Selling and marketing	2,418		3,557		8,714		10,230
	General and administrative	3,398		3,808		10,487		11,797
		8,689		12,192		30,182		36,413
Loss before other items		(3,755	)	(4,474	)	(15,714	)	(16,916	)
	Goodwill impairment	-		-		(11,927	)	-
	Restructuring costs	(1,419	)	-		(1,419	)	-
	Amortization of intangible assets	(149	)	(333	)	(481	)	(981	)
	Accretion expense	(36	)	(69	)	(168	)	(109	)
	Interest expense	(499	)	(301	)	(1,590	)	(1,105	)
	Warrant issuance expenses	-		-		-		(221	)
	Gain on change in estimate	-		200		-		301
	Gain on sale of fixed assets	-		18		-		18
	Fair value adjustment - warrant liability	293		1,880		1,188		1,028
	Foreign exchange (loss) gain	270		145		(24	)	519
Loss before income taxes		(5,295	)	(2,934	)	(30,135	)	(17,466	)
	Income tax expense	459		502		2,146		1,047
Net Loss		(5,754	)	(3,436	)	(32,281	)	(18,513	)
	Net Income Attributable to Non-Controlling Interest	(493	)	(320	)	(892	)	(739	)
Net Loss attributable to shareholders		(6,247	)	(3,756	)	(33,173	)	(19,252	)
Net loss per share
	Basic	(0.08	)	(0.05	)	(0.44	)	(0.29	)
	Diluted	(0.08	)	(0.05	)	(0.44	)	(0.29	)
Weighted Average Shares Outstanding
	Basic	75,450,850		75,254,452		75,341,034		65,738,695
	Diluted	75,450,850		75,254,452		75,341,034		65,738,695